Court Determines Medicare Set-aside Amount Based on Competing Testimony

- by Matt N. Tully, Esq.

 

The plaintiff in this case, Steven Welch, entered into a joint settlement with a workers’ compensation carrier and a general liability carrier.   Welch v. American Home Assurance Company, 2013 U.S. Dist. LEXIS 25948 (S. D. Miss Feb. 26, 2013).  However, if the case had been litigated and Welch had prevailed on his theory of recovery, he would have been awarded medical expenses under state tort law, not the state's workers’ compensation laws.   For this reason, the court was unclear whether the settlement should be considered eligible for CMS review and approval.  At the time of settlement, Welch was appealing the denial of his Social Security Disability application.  The parties petitioned the court to set an amount for a Medicare Set-aside as opposed to having an estimate prepared by a third party.

To determine the amount of future medical needs, the court heard testimony from Welch’s treating physician who estimated that Welch would require $456,657.35 in future medical treatment.   The court then heard from a nurse qualified in the field of life care planning and Medicare/CMS coverage rates.   Based on her testimony, which covered crucial points such as standard Medicare rates and non-covered items and services, the court found that the estimate of the treating physician was much too high.   The nurse expert identified $211,886.27 in items and services that would not be covered by Medicare and therefore should not be included in an MSA.   The court made further reductions based on standard Medicare rates and found that $278,019.08 would adequately protect Medicare’s interest, a significant reduction from the treating physician’s estimate.